Hexatronic Group AB (publ) Interim Report January – March 2020

Events during the quarter

• Emtelle UK Ltd. and Hexatronic entered into a global settlement agreement, ending their patent litigation in the UK.
  
   
• Emtelle licensed Hexatronic under its patents on air blown fiber bundles. Hexatronic can continue to make and sell its air blown fiber products in all markets worldwide.

Events since the end of the period

• Based on the very uncertain situation in the world, the Board decided to withdraw the previously announced dividend proposal.
  
   
• During the first quarter, Hexatronic had a minor negative impact as a result of Covid-19 and expects continued slightly lower activity in the second quarter.
  
   
• Hexatronic won submarine cable orders totalling MSEK 40.

COMMENTS FROM THE CEO

Continued strong international growth

Growth on our strategic growth markets remained strong during the first quarter. In North America we grew organically by 17 percent, which means that three years after establishing an operation there, sales are almost on a par with sales in Sweden. Growth on our other strategic growth markets, the UK and Germany, amounted to 16 percent.

Following a weak start, sales on the Swedish market recovered well in the latter part of the quarter. Our prediction remains that Sweden will be on a par with last year, providing the impact of Covid-19 does not increase from its present status. 

Altogether, organic sales growth during the quarter totalled 4 percent, and growth in EBITA 5 percent. We judge that sales have dropped by approximately 5 percent as a result of Covid-19, primarily related to delivery problems from subcontractors in China.

The order book has developed strongly, and we entered the second quarter with an order book that is 35 percent higher organically than at the same point last year. In submarine cables, we have recently won several contracts worth MSEK 40 in total. Pleasingly, several of these projects are for new customers. On the German market, where we are still a small player, we have won several minor FTTH contracts, and have signed a five-year, MSEK 40 general agreement with a large regional operator.

In the latter part of the quarter, a slight negative effect from Covid-19 was apparent on several markets. Although our operation is categorised as critical on several markets, uncertainty remains high and there is a risk of greater adverse impact. Customers are reacting in different ways, from postponing new projects to continuing as before. With the information we have at present, we are planning for slightly lower activity during the second quarter. Another effect of Covid-19 is that our new duct factory in Texas has been delayed by just over a month and is now expected to be up and running in early May.

Under the uncertain circumstances, we have prioritised a strong balance sheet. This means for instance that the Board has withdrawn its dividend proposal for the year, and we have also decided to postpone certain investments to a later date. Our financial position is strong and has grown stronger during the quarter. We have higher margins both in terms of available funds and the covenants we have in place with our bank.   

Looking beyond Covid-19 our anticipated outlook remains very positive, with strong developments on our strategic growth markets. There is a huge need to expand the fiber optic communication systems. The importance of fast, reliable internet connections is coming to the fore in these times of working from home, video meetings and online schooling. In the longer term, we believe that experiences from Covid-19 will have a positive impact on investment in communication networks.

Thank you for joining us on this journey.

Henrik Larsson Lyon

President and CEO Hexatronic Group AB (publ)

Publication

This information comprises disclosures that Hexatronic Group AB (publ) must publish according to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, under responsibility of the contact persons named below, on 29 April 2020 at 08:00 CET.

Please direct any questions to:

• Henrik Larsson Lyon, President and CEO, + 46 (0)70-650 34 00

• Lennart Sparud, CFO, + 46 (0)70-558 66 04

This is Hexatronic

Hexatronic Group AB (publ) is a group that develops, markets and delivers products, components and system solutions with the main focus on the fiber optic market. Hexatronic offers a wide range of innovative system and product solutions mainly for passive fiber optic infrastructure with global trademarks like Ribbonet®, Micronet™, Drytech™, Lightmate®, FibreHub™, Matrix, Viper, Stringray, Raptor, InOne and Wistom®. The Group has its headquarters in Gothenburg, Sweden and has sales offices and/or subsidiaries in Sweden, Norway, Finland, United Kingdom, Germany, China, New Zealand and the US. The Group is listed on Nasdaq Stockholm under the ticker HTRO. For more information, visit .

Hexatronic Group AB (publ) Org nr 556168-6360

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